Middle East carriers strongest performers in July, says IATA

IATA's latest report finds that global traffic growth in July slowed in both air travel and freight due largely to a drop a business confidence across much of the world.

Passenger demand worldwide was 3.4% higher than the same month last year, compared to a 6.3% increase in June and average growth of 6.5% over the first half of the year, IATA noted.

Middle East carriers enjoyed the strongest traffic growth at 11.2% year-over-year, although this was surpassed by a 12.4% rise in capacity, the travel body said. Compared to June, traffic rose just 0.1%.

"The Middle Eastern airlines are once more expanding rapidly, gaining share in a number of long-haul markets, having slowed in the aftermath of the 2008-9 recession. The market expanded by 11.2% in July year-on-year. And although this is down on the June result of 18.9%, it is likely that several percentage points of the fall is due to Ramadan commencing a month earlier than last year," the report said.

Total air freight volumes weakened in July, with the market 3.2% smaller than a year ago, after a slight increase of 0.1% in June, IATA said. Other than the Middle East, which experienced a 16% increase in air freight demand in July year-on-year, all markets declined compared to a year ago. Also, air freight markets made no progress in July compared to June.

The report warned that the industry will continue to face stiff headwinds for the remainder of the year due to ongoing economic uncertainty.

"The cargo business is 3.2% smaller than it was a year ago. And passenger markets—with the exception of Africa, China-domestic and the Middle East—saw demand fall from June to July," said Tony Tyler, IATA's Director General and CEO. "Overall passenger demand is still up 3.4% on the previous July. But the growth trend is clearly slowing. This, along with rising fuel prices is likely to make it a tough second half of the year."

Airlines have responded to this slower growth environment by reducing the capacity added to markets, a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices, IATA said. In July passenger capacity rose 3.6%, in line with the expansion of traffic, keeping the load factor at a relatively high 83.1%.